US Bond Selloff Drives 30-Year Yields to Highest Since 2007

US Bond Selloff Drives 30-Year Yields to Highest Since 2007

Mon, August 17, 2026 at 7:44 PM GMT+3 3 min read

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(Bloomberg) -- The yield on 30-year US Treasuries hit the highest in almost two decades, reflecting investor angst over the surging national debt, a flood of long-dated bond sales and inflation that's been stuck over the Federal Reserve's target for the past five years.

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The rate on the so-called long bond rose three basis points to 5.29% on Monday, the highest since 2007. The move pushed it closer to that year's 5.44% peak during the early days of the global financial crisis.

The rise, which is driving up the US government's borrowing costs, is part of a broader trend in global bond markets, where investors are demanding more compensation to protect themselves against the risk of mounting government debts and persistently high inflation that's likely to keep short-term interest rates elevated.

In the US, the movement is also being fueled by sudden ramp-up of corporate borrowing to fund the artificial-intelligence boom and waning demand from traditional buyers of long-dated bonds.

"We have been arguing against fading the long end sell-off, and we continue to do so," said Anshul Pradhan, head of US rates strategy at Barclays Plc. "A constructive view would require some combination of a downside fiscal surprise, slower AI-related issuance, a shift in Treasury's issuance strategy, and a sustained run of soft activity data."

The trading Monday extends the selloff from last week, which forced the US Treasury to sell $25 billion of new 30-year bonds at a yield of 5.216% — the highest level for such an auction since 2001. A day earlier, the Treasury Department's 10-year auction drew the highest financing cost since 2007.

The rise in long bond yields comes even after recent economic data takes off some of the pressure on Federal Reserve officials to raise short-term interest rates in coming months.

A gauge of underlying inflation released last week showed it was more subdued, July's employment report revealed that US employers unexpectedly cut jobs in July, and US retail sales fell by the most in more than a year. Even so, inflation remains well above the Fed's 2% annual target, with the consumer price index last month rising 3.4% from a year earlier.

That softening of US economic data has fueled a divergence between different maturities of Treasuries, steepening the yield curve. The yield on 30-year bonds has risen over 13 basis points so far this month while two-year rates are down 12 basis points.

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